Cakovecki mlinovi d d : Grupa ČM - Q2 2023 izvještaj ENG

ČAKOVEČKI MLINOVI INC.

CONSOLIDATED FINANCIAL REPORT FOR H1 2023

CONTENTS
CONSOLIDATED INTERIM MANAGEMENT REPORT FOR H1 2023	............................................ 3
1. BUSINESS RESULTS IN H1 2023	4
ABOUT THE GROUP ČAKOVEČKI MLINOVI	4
BUSINESS SEGMENTS AND OPERATIONS	4
KEY EVENTS IN 2023	6
KEY FINANCIAL INDICATORS OF THE GROUP	7
SUMMARY OF GROUP RESULTS	8
ASSESSMENT OF THE GROUP'S QUARTERLY RESULTS	8
SALES REVENUE	9
OPERATING COSTS	10
EBITDA	10
NET PROFIT	11
NET DEBT	11
CASH FLOWS	12
VALUATION OF THE ČAKOVEČKI MLINOVI GROUP	12
2. EXPECTED BUSINESS DEVELOPMENT IN 2023	13
CONSOLIDATED FINANCIAL STATEMENTS FOR H1 2023	16

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ČAKOVEČKI MLINOVI INC.

CONSOLIDATED INTERIM MANAGEMENT REPORT

FOR H1 2023

1. BUSINESS RESULTS IN H1 2023

ABOUT THE GROUP ČAKOVEČKI MLINOVI

Čakovečki mlinovi Inc. (hereinafter: "Čakovečki mlinovi" or " Company"), founded in 1893 in Čakovec, is one of the oldest Croatian food and trade companies. The Company manages a vertically integrated business model that includes the production of high-quality mill, bakery and oil products on one hand and trade of mixed goods on the other. Although food production is a tradition and heritage of the Company, through a series of successful acquisitions and integration of trade chains the Company has grown into a business system that today generates most of its revenue from trade activities.

Čakovečki mlinovi Inc. has three subsidiaries: Trgovina Krk Inc. Malinska, Trgocentar Inc. Virovitica and

Radnik Opatija Inc. Lovran (together: "Čakovečki mlinovi Group" or "Group") and one associated company: Narodni trgovački lanac Ltd. Soblinec. In the comparable data for the year 2022, the subsidiary Trgostil Inc. was also consolidated and merged with Trgovina Krk d.d. on 3 October 2022. Čakovečki mlinovi Inc. in addition to the non-consolidated reports of the Companies, they also prepare the consolidated reports of the Group separately.

In H1 2023 the Čakovečki mlinovi Group generated EUR 94 million in consolidated total revenue based on consolidated total assets in the amount of EUR 112 million. As at 30 June 2023, the Group employed 2.319 employees.

The shares of Čakovečki mlinovi Inc. are listed on the Official Market of the Zagreb Stock Exchange (as of 18 April 2023) under the symbol CKML. As at 30 June 2023, the Company has 10,290,000 of issued and listed shares with a market capitalization in the amount of EUR 108 million.

BUSINESS SEGMENTS AND OPERATIONS

Čakovečki mlinovi Group is organized into two strategic business segments:

• Trade, which includes retail and wholesale trade of food and non-food assortment, and
• Food, which includes the production of flour, bakery products and oils.

Čakovečki mlinovi Inc. manages these segments from a strategic level and acts as the Group's corporate center. The Trade segment is operatingly managed by Trgovina Krk Inc. The Food segment is operatingly managed by Čakovečki mlinovi Inc. and Radnik Opatija Inc.

Below presented are the Group's business segments and their key operating indicators.

Trade

KEY OPERATING INDICATORS

Number of trade stores

Store sales area (in m2 net)

Average area per store (in m2 net)

Area of distribution warehouses (in m2 gross)

Average number of employees

30.6.2023.

30.6.2022.

1. 439
   55.331 54.561

1. 124
   11.343 11.343
   1.833 1.995

Trade is the largest segment of the Čakovečki mlinovi Group, which in H1 2023 generated 86% of the Group's sales revenue before intergroup eliminations.

The Trade segment is organized in two business areas:

• retail - trade of mainly food and to a lesser extent non-food assortment, and
• wholesale - trade of food, non-food and construction assortment.

Retail trade accounts for 97% of Trade sales revenue. At the end of 30 June 2023, the Trade segment operated 438 stores located in northwestern Croatia, Kvarner and the island of Krk. The total net sales area amounted

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to 55.331 m2, of which 65% area is owned by the Group, and 70% of the area is located in the continental part of Croatia. The main factors of the store's offer are the store proximity and the local assortment, which is why the Group's stores are mostly located in smaller villages or residential areas and have an average net sales area of up to 400 m2. This format of stores in Croatia is defined as a market or supermarket, while internationally it is known as proximity format due to its characteristic proximity to customers.

Trgovina Krk Inc. holds a 25% ownership share in the company Narodni trgovački lanac Ltd. (hereinafter: "NTL"), the largest buying group for food assortment in Croatia, through which it realizes about 80% of the purchase of goods. In addition to providing commercial services to its members, the development of the NTL brand and the purchase and distribution of fruits and vegetables, NTL operates its own trade network of 253 stores and 6 wholesale logistics and distribution centers. In 2022, NTL generated EUR 160 million in total revenue and EUR 5.2 million in net profit. Trgovina Krk Inc. is also a member of Grandal grupa Ltd., the largest buying group for building materials in Croatia.

Food
KEY OPERATING INDICATORS	30.6.2023.	30.6.2022.
Grain processed (in tons)	23.394	26.208
Production of bakery products (in tons)	3.691	3.597
Oil production (in tons)	4	5
Average number of employees	271	289

The Food segment covers food production and is organized into three business areas:

• milling - production of flour and other milling products and to a lesser extent porridge and feed flour,
• bakery - production of mainly bread, pastries and cakes and to a lesser extent dough, and
• oil production - own production of pumpkin and service production of olive oil.

As at 30 June 2023, the Food segment managed two mills (Čakovec, Donji Kraljevec) with a total production capacity of 80,000 tons per year, four bakeries (Čakovec, Oroslavje, Lovran, Malinska) with a total production capacity of 11,533 tons per year and two oil mills (Čakovec, Punat).

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